RE:Seeking Alpha: Fission - Still Undervalued 50%-125% UpsideIf these projections are accurate, it would bring the project to just under 54 million lbs, pushing it over what many consider to be an important milestone at 50 million lbs.
While this already represents an impressive resource that would likely be developed, this remains in its early stages and the deposit is open in all directions. Filling the gaps between zones will greatly expand the resource, and with at least 78 holes left for this purpose during the winter program, the pounds should add up fast. With numerous other highly prospective conductors and anomalies on the property remaining to be tested as well, this project continues to have the potential to be up there with some of the best in the history of the Athabasca basin.
Why is the market missing this?
- The uranium spot price remains extremely depressed and is hovering around the $36 mark.
- Negativity and fear continue to drag on nuclear energy-related stocks following the Fukushima disaster in 2011.
- Growth in the industry will be dominated by developing nations outside of North America, so U.S. investors remain hesitant.
- Overall, it has been a negative environment for commodities and junior resource stocks in particular.
- Although increasing, there is still a lack of attention on the project and analysts have been slow to update reports and estimates.
- Many institutional investors will not, or are unable to, invest in a small cap junior explorer, particularly one without an NI 43-101-compliant resource.
Catalysts
Fission has a busy year ahead of it, with several catalysts that should drive the stock higher. The company is just 12 holes into its massive 100+ hole winter program. This program will continue to expand the 6 zones of high-grade mineralization, and it also appears more and more likely that it will show that these zones are connected. On top of this, any success testing the numerous other high-priority targets on the property (14 holes planned this winter) could take this project to another level. The news flow should be steady over the next several months, with initial scintillometer results followed by assays. This will be followed up with a similarly large summer drill program and a NI 43-101-compliant resource before the end of the year.
If you look at the three near-surface projects in the basin that were open-pittable (Cluff Lake, Key Lake, and McClean Lake), they have all been mined out. This is not surprising due to the significantly lower costs involved. The majors will likely be particularly cost-conscious in the current low-price environment. This is why the PLS discovery is so unique and should receive a premium valuation. This project is not just a top-quality high-grade deposit, it appears to be the ONLY near-surface, high-grade, open-pittable known uranium resource in the world. This is what makes Fission probably the best takeover target in the uranium space. While often the majors would wait for an NI 43-101-compliant resource, this may not necessarily be the case with such a unique project. Having the project now consolidated into a single entity has removed the largest barrier to a takeover. There are numerous potential candidates, in particular Cameco (
CCJ), Rio Tinto (
RIO), Areva (
OTCPK:ARVCF), and several Asian utilities. Cameco would make the most sense due to its dominant position in the Athabasca basin as well as an explicit commitment to focus on its core operations there. Although they backtracked slightly in the most recent conference call, management has stated that they are actively looking for acquisitions and they have been beefing up the balance sheet for a while now, including a recent $450 million sale of the company's stake in Bruce Power. While Cameco already had plenty of liquidity to fund growth before the sale, according to CEO Tim Gitzel, it plans to "reinvest in our core uranium business where we see strong potential for growth."